Making your own money isn’t enough, you need to own it too: In conversation with Priya Tanna and Aditi Kothari Desai

Published by DSP MUTUAL FUND

January 8, 2019

It’s time to go from “earning” your money to “owning” your money

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If you’re working and making your own money—congratulations! You’re on your way to financial independence. However, your journey to empowerment doesn’t end there, it’s just beginning. While it’s great to be able to indulge yourself every salary-day with a Louis Vuitton bag, a Chanel perfume or a tub of artisanal ice cream, there are certain questions you need to ask yourself.

For instance, after all your indulgences, how much are you saving, if anything? If you are saving, are you entrusting the management of your savings to someone else in the family? Do you fully understand what’s happening with your hard-earned money? Is it wise to buy that expensive designer bag now or should you delay it for when your finances are in order? If you can’t answer such questions with confidence, you’re not truly financially independent or in control of your money, are you?

True financial independence starts with taking charge of your money. And what does “taking charge” mean? Aditi Kothari Desai, director and head of sales and marketing at DSP Investment Managers, says it means having control of your money, from the time you earn or inherit it to the time you use it to meet your long-term goals (and everything you choose to do in between – spend it, save it or invest it).

As editor-in-chief of Vogue India, Priya Tanna, puts it: “Taking charge of your money eventually leads to you being able to take charge of your life, because all your decisions are yours. You’re not dependent on anybody else for them, out of choice.” Tanna believes that it’s not just important to be emancipated with your life decisions or to have a job, but also to know what to do with the money you make from your job. From choosing how you spend it to how you save or invest it, she strongly believes all decisions should rest with you.

It’s surprising to see the number of women who simply spend what they need, and then hand over the remainder of their hard-earned money to their fathers, brothers or husbands, to take care of it (read: invest it). They seem not to care about what’s ultimately happening with their money!

“Money is a thing that’s most empowering and is a necessary aspect of one’s life”, says Tanna. “With money comes freedom: the freedom of choosing where you want to live, the freedom of choosing how you want to live, the freedom of choosing the kind of job you want, the freedom of being able to marry your passion with your profession. I feel the freedom of wealth is one of the single most important freedoms to have.”

If you’re not being wise with your money, you’re giving up a part of your freedom. So, what does being “wise” mean? For starters, it means understanding how much you’re spending and how much you can afford to save. It’s essential to allocate a certain percentage of your savings to investments. It doesn’t matter what sum – it could be anything from 1000 rupees to a lakh. If you have a regular salary, a simple rule of thumb some experts recommend: Spend 50% for your house expenses and basic needs, 30% on fun and 20% for the future you (through smart investing!).

Why should you invest? “To beat inflation, if not for anything else”, says Desai. In India, whether the markets are up or down, inflation (rising prices) is constant: it’s eating away at your money. Keeping cash under your pillows or saving it in safety deposit boxes is foolhardy – the value of 100 rupees today is not going to be the same tomorrow. Simply put, if the rate at which your money grows does not beat inflation, then its value is declining daily! You will be able to purchase much less with it tomorrow, as your money isn’t growing at the same rate as prices are rising (not a very pleasing thought, is it?). After all, nobody wants their earnings to be worthless! And while we’re at it—do you even know the rate of inflation today? And more importantly, do you know what your money is earning in your savings account?

To help answer such simple questions and educate women on the importance of investing, Aditi started Winvestor, an initiative at DSP Mutual Fund, where she helps connect potential women investors with women financial advisors, among other things. Desai says she has learnt through experience that most women don’t take charge of their money because they don’t know enough and are shy to ask basic questions. She also realised that women aren’t as reticent to discuss money issues with other women; that’s how the idea of connecting women with women was born. What helps is empathy, minimum use of jargon, a genuine desire to help fellow women who need sound advice and the ‘comfortable atmosphere’ women consultants can create while discussing such sensitive matters.

While there aren’t as many women who are financial advisors as there are men, Aditi ensures the experts who sign up for the program take a pledge to help potential female investors—even if their investment amount is miniscule.

Of course, you may have many questions, as you begin your journey of investing. Especially if you’ve never invested or have had others make those decisions for you. If you’re keen to learn about investing then you must start with the basics. DSP has developed dspim.com/Learn where you can take a crash course on investing. On the other hand, if you’re convinced about the need to invest but don’t have an advisor, write to winvestor@dspim.com, or fill in your details here. A woman financial advisor will reach out to you (I tried it—it really worked! Binoli, a financial advisor, promptly called me). And trust me: you can ask her the silliest of questions and as many as you like. I did this and she replied enthusiastically, in a clear and easy-to-grasp manner.

To sum up, if you have the money—whether you have earned it or inherited it, it’s not smart to:

Spend it all: Life can throw you an unexpected curveball!

Save it in your bank account: You need to beat inflation!

Give it to a relativeto manage: It’s your money, you better own it!

Which means you must invest, knowing that the value of your money will increase over the long run—so you can sleep better at night, knowing that you finally decided to #TakeCharge!

PS:The inflation rate in India has been between 4-10% in the past few years (currently it is approximately 4%), while the interest rate your money earns while it’s in your bank savings account is 4-6%, depending on your daily account balance (Data source: Internal). The important bit to note is that on an average, your bank savings account’s interest rate may not even beat the rate of inflation! Which means while your money is in your bank, it may actually be reducing in value!